Commercial Division Blog

Posted: May 9, 2022 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Christopher R. Dyess, Joshua Wurtzel, Hillary S. Zilz / Category Commercial Division Justices

Foreign Bank’s Submission of Trading Data to Internet Platforms Not Sufficient to Trigger Jurisdiction of New York’s Long Arm Statute

On April 13, 2022, Justice Crane of the New York County Commercial Division issued a decision in Qatar v. First Abu Dhabi Bank Pjsc, 2022 NYLJ LEXIS 410, holding that a motion to dismiss a complaint against a foreign bank for lack of jurisdiction should be granted where the only contacts the bank had with New York were allegedly submitting quotes to globally accessible internet trading platforms and the maintenance of two correspondent bank accounts in the state, stating:

"[A] New York court may not exercise personal jurisdiction over a non-domiciliary unless two requirements are satisfied: the action is permissible under the long-arm statute (CPLR 302) and the exercise of jurisdiction comports with due process" (Williams v. Beemiller, Inc., 33 NY3d 523, 528 [2019]). "If either the statutory or constitutional [*4] prerequisite is lacking, the action may not proceed" (id.).

Under CPLR 302 (a) (1), "a court may exercise personal jurisdiction over any non-domiciliary...who in person or through an agent...transacts any business within the state" (CPLR 302 [a] [1]). This is a "single act statute," meaning that "proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted" (Kreutter v. McFadden Oil Corp., 71 NY2d 460, 467 [1988]). "Purposeful activities are those with which a defendant, through volitional acts, 'avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws' "(Whitcraft v. Runyon, 123 AD3d at 812).

Jurisdiction under CPLR 302 (a) (1) is not appropriate. Plaintiff alleges that Samba "transacted business in New York" by submitting FOREX rate trading quotes for Qatari currency and bonds through trading accounts with Bloomberg and Reuters "to platforms and data centers located in New York County." Plaintiff argues that Samba's use of platforms [*5] and data centers (servers), offered by Bloomberg and Reuters, to submit currency exchange quotes constitutes transacting business in New York. Through the affirmation of Abdullah Omar Al-Marshad, a rates trader Samba employed, Samba asserts that its traders use Bloomberg's and Reuters' services from Samba's offices in Saudi Arabia and United Arab Emirates (Doc 36).

The submission of data [international rates quotes] by traders in foreign nations to internet trading platforms accessible globally does not, without more, constitute "purposeful activities" within New York, regardless of whether the data or platforms were maintained on servers located in New York (cf. Sonterra Capital Master Fund Ltd. v. Credit Suisse Group AG, 277 F Supp 3d 521, 590 [SDNY 2017] [noting that "the happenstance that the electronic communications of defendants acting abroad were routed through a server in the United States cannot substantially contribute to a finding of sufficient contacts with the United States," and "(t)he knowledge that [false CHF LIBOR] rates would be disseminated worldwide, including into the United States, is not enough by itself to support specific personal jurisdiction..."]).

Further, while Samba maintains two correspondent bank accounts in New York, there are no allegations in [*6] the complaint that those correspondent accounts had any role in the allegedly tortious acts. "[S]tanding by itself, a correspondent bank relationship, without any other indicia or evidence to explain its essence, may not form the basis for long-arm jurisdiction" (Amigo Foods Corp. v. Marine Midland Bank-NY, 39 NY2d 391, 396 [1976]). Here, plaintiff does not allege facts from which the court can infer that the correspondent accounts played any role in the alleged fraudulent scheme, let alone proximately caused the alleged injury.

The attorneys at Schlam Stone & Dolan are well versed and frequently litigate issues related to the presence of jurisdiction under New York’s long-arm statute.  Contact our attorneys at commercialdivisionblog@schlamstone.com if you or a client have questions regarding these issues.

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